New Case Law Update: Mountain Valleys, Chevron Deference And A Long-Awaited Resolution On The Sacketts' Small Lot

• Published date: 06 June 2023
• Subject Matter: Environment, Energy and Natural Resources, Energy Law, Environmental Law, Oil, Gas & Electricity, Water
• Law Firm: Pillsbury Winthrop Shaw Pittman
• Author: Mr Anthony B. Cavender

This is a brief roundup of recent federal court environmental and regulatory law decisions from the federal courts over the past few months, including the much anticipated ruling in Sackett, et ux., v, Environmental Protection Agency.

THE U.S. SUPREME COURT

Sackett, et ux., v, Environmental Protection Agency
Last year, the Supreme Court issued a significant decision curtailing some of the EPA's regulatory powers in the Clean Air Act in West Virginia v. Environmental Protection Agency. On May 25, 2023, the Court limited EPA's'and the U.S. Army Corps of Engineers' authority'under the Clean Water Act. This, too, is a major environmental ruling. The Court held that the EPA could not classify the wetlands located on the Idaho property of Michael and Chantell Sackett as "Waters of the United States" on the basis of the "significant nexus" test devised by Justice Kennedy in his separate opinion in the 2005 case of Rapanos v. United States. Accordingly, the Court unanimously held that their property was not subject to the EPA's or the U.S. Army Corps of Engineers' permitting and enforcement power. In 2004, the Sacketts purchased a small lot near Priest Lake in Bonner County, Idaho, on which to build a home. As related by Justice Alito, once they began to fill in their property with dirt and rocks, they were notified by EPA that their backfilling operation violated the Clean Water Act (CWA) because they were affecting protected wetlands. The Sacketts challenged this action, thus beginning a long legal battle with EPA and the federal government. In 2021, the U.S. Court of Appeals for the Ninth Circuit upheld the federal government's regulatory authority over these wetlands, holding that the CWA covers "adjacent" wetlands having a significant nexus to traditional navigable waters. The Supreme Court decided that this case was suitable for determining whether the Sackett's wetlands are "waters of the United States" and thus subject to the permitting and regulatory enforcement powers of the EPA and the Corps of Engineers.

The Court reviewed the long and complex history of the CWA, and its many interpretations the agencies have made over the years. As the Court notes, the term "waters of the United States" has been the focus of three intensive rulemaking proceedings since 2015, culminating the "significant nexus" test now being employed by the EPA and the Corps of Engineers. In a 5-to-4 vote, the Court held that the proper test to decide whether a body of water, particularly wetlands, was subject to federal jurisdiction was whether the wetlands have surface connection to bodies of water that are waters of the United States in their own right so that there is no clear demarcation between waters and wetlands. This ruling overturned the determination that the Sacketts' property contained regulated wetlands even though they were located on the other side of a 30-foot road which feeds into a non-navigable creek which then feeds into Priest Lake, an indisputably navigable body of water. The rejection of the significant nexus test was based on a close reading of the text of the CWA, and to those who criticized this approach, such as Justice Kavanaugh, Justice Alito responded that "textual arguments that ignore the operative test cannot be taken seriously."

While this decision will reduce the scope and scale of some federal powers under the CWA, it does not foreclose the ability of states to fill the void, or the ability of the Congress to amend the Act that was enacted more than 50 years ago. In the interim, the agencies have promulgated dozens of rules and developed permitting and enforcement policies based on their reading of the law as it was then, which are now likely to be revisited.

Axon Enterprise, Inc. v. Federal Trade Commissionand Securities and Exchange Commission v. Michelle Cochran
On April 14, 2023, the Supreme Court issued a unanimous ruling holding that targets of investigations or enforcement actions by federal agencies, in this case the Securities and Exchange Commission (SEC) and the Federal Trade Commission (FTC), may have their constitutional claims against these proceedings heard by a federal district court and are not forced first to channel those claims "through the administrative review schemes at issue." The Court, in an opinion written by Justice Kagan, states that "We now conclude that the review...